When it comes to economic mobility, place matters

When it comes to moving up in life, it may not be what you do... but where you live. A new study is being heralded as the first, most-complete study of mobility and how it relates to where a child lives.

Why does the layout of cities matter so much in mobility?

Harvard's Raj Chetty says he and the other authors of the study were struck by the amount of variation in mobility across areas. Chetty says they started out thinking it had something to do with tax policies, since places with higher property tax rates have more spending on schools and higher rates of mobility.

However they found that many other factors matter. For example, some of the lower-income people in cities that come up on the short end of economic mobility live nowhere near the higher income people. Chetty says that can impact mobility in a number of ways.

"Take for example the quality of schools. If you’re living in an area with several affluent people as well as lower-income people, it’s conceivable that the quality of schools might remain quite high," says Chetty. "Whereas if the lower-income people are completely segregated it’s plausible that the quality of the schools is just not as high in low-income areas because of a lack of funding and that might set people back."

While the study may seem depressing at first glance, Chetty says that it gives him hope. He says the data shows that there are places in the U.S where people from low income backgrounds are still successful despite where they live.

“Take places like Salt Lake City, Utah, where if you’re born in the lowest part of the income distribution, there’s still a 12 percent chance that you’re going to reach the top of the income distribution, not that far away from the probability that a child from a more affluent family would have reached that same level of success,” says Chetty.

Should people move to areas where they have a better chance of mobility?

According to the study, the states with the least economic mobility were mainly clustered in the South. If you’re from North Dakota however, you have a better chance of upward mobility. This poses the question: Should lower-income earners in places like Atlanta move to places like North Dakota? Nate Hendren, another author of the study, says that the data is too preliminary to answer those kinds of questions. However, he says the data can serve as a good tool for creating policy moving forward.

“What we hope is that this is a first step in really understanding what people can do. I think we’d be hard pressed to say that we’ve answered the question to what should be done,” says Hendren.

Is the U.S still the land of opportunity?

Chetty says the study shows that this may not be the right question to ask. While there are some places where there is a lot of opportunity for upward mobility where kids from low income families do have a chance to do well, however there are still places where this is not the case.

Chetty says that overall levels of upward mobility would ideally be higher in the U.S. He says hopefully this study will help them figure out how to improve the lower kids’ chance for upward mobility.